The Judgment of the Court was delivered by
Costello, J.:— The suit out of which this appeal arises was brought by the plaintiffs in order to obtain a decree in form 5A or alternatively in form 5 of App. D of the Code of Civil Procedure as amended by the Transfer of Property (Amended) Supplementary Act, 1919, so that they might recover such sum as should be found to be due in respect of principal and arrears of interest said to be due and payable under a memorandum of agreement dated August 2, 1924.
The case for the plaintiffs as it appears from their plaint was that on July 24, 1924, they lent and advanced to the defendants Kedar Nath Shaha, Ateendra Nath Shaha and to one Jnanendra Nath Shaha the sum of Rs. 12,000 and afterwards Kedar Nath Shaha, Ateendra Nath Shaha and Jnanendra Nath Shaha on the same date deposited with the plaintiffs at No. 11, Old Post Office Street in the city of Calcutta the title deeds of certain premises known as No. 75, Beniatola Street, Calcutta, with intent to create a security thereon for the repayment of the sum of Rs. 12,000 with interest thereon at the rate of 9 per cent, per annum.
It was then averred that on August 2, 1924, the plaintiffs lent to the same persons a further sum of Rs. 13,000 and the deposit of the title deeds relating to No. 75, Beniatola Street was to continue and to be treated as being security for the repayment both of the sum of Rs. 13,000 and the prior loan of Rs. 12,000 amounting in all to the sum of Rs. 25,000, together with interest on that sum at the rate of 9 per cent, per annum payable half-yearly with half-yearly rests—in default of repayment on August 1, 1927.
It is stated in the plaint that on August 2, 1924, Kedar Nath Shaha, Ateendra Nath Shaha and Jnanendra Nath Shaha executed at the premises No. 11, Old Post Office Street a memorandum in favour of the plaintiffs evidencing the fact of such deposit and the advances which had been made. It appears that Jnanendra Nath Shaha died intestate sometime in the year 1929 and, accordingly, in his place his only son and heir Nripendra Narayan Shaha was made a defendant in the suit. The total amount claimed by the plaintiffs upon the basis of the averments which I have quoted was Rs. 44,464-13 as.
Stated shortly, therefore, the suit was one brought to enforce an equitable mortgage, i.e, a mortgage by deposit of title deeds. Having regard to the material dates, the matter falls within the purview of the old s. 59 of the Transfer of Property Act of 1882, that is to say, s. 59 as it stood prior to the amendment of that Act in the year 1929. Section 59 formerly read as follows:—
Where the principal sum secured is one hundred rupees or upwards, a mortgage can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses.
Where the principal sum secured is less than one hundred rupees, a mortgage may be effected either by a registered instrument signed and attested as aforesaid or (except in the case of a simple mortgage) by delivery of the property.
Then follows this very important proviso:—
Nothing in this section shall be deemed to render invalid mortgages made in the towns of Calcutta, Madras, Bombay, Karachi, Rangoon, Moul-mein, Bassein, Akyab and in any other town which the Governor-General in Council may, by notification in the Gazette of India, specify in this behalf, by delivery to a creditor or his agent of documents of title to immoveable property, with intent to create a security thereon.
These provisions have the effect that a mortgage may be created merely by the delivery to a creditor otitis agent of documents of title to immoveable property with intent to create a security thereon. The plaintiffs' case in the present instance was that the mortgage which they were seeking to enforce had been created in that manner and in no other way.
For the purpose of determining the points which arise in the present appeal it is important and indeed vital, in my opinion, to bear in mind that the essence of a mortgage of the kind we have to consider is the actual handing over by a borrower to the lender of documents of title to immoveable property with the intent that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. The authorities show, however, and indeed it is, I think, common knowledge that it often happens that a writing is made by both or one of the parties in connection with the transaction. The result is that in certain circumstances the provisions of the Registration Act 1908, are brought into operation and in particular the provisions of s. 17 of that Act which are as follows:—
(1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI of 1864, or the Indian Registration Act, XX of 1866, or the Indian Registration Act VIII of 1871, or the Indian Registration Act III of 1877, or this Act came or comes into force, namely:—
(a) instruments of gift of immoveable property;
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immoveable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest;
(d) leases of immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent; and
(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immoveable property;……..
The rest of s. 17 is not material for our present purpose.
If the circumstances are such that a writing relating to or made in connection with a mortgage by deposit of title deeds ought to be registered under the provisions of s. 17(1), it then follows that failure to register has the effect provided for in s. 49 of the Registration Act which so far as is material reads thus:—
No document required by s. 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall—
(a) affect any immoveable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power,
unless it has been registered.
The important part of s. 49, for immediate purposes, is the proposition which in effect amounts to this that no document, which ought to have been registered but yet has not been registered, shall be received as evidence of any transaction affecting such property or conferring such power. It seems tolerably clear from the form in which the plaint in this case was drafted that the legal advisers of the plaintiffs were fully cognizant of the provisions of ss. 17 and 49 of the Registration Act and were desirous of avoiding any possible obstacle which might confront them by reason of the provisions of those sections. This would seem to account for the averment that the memorandum which was executed on August 2, 1924, was a memorandum “evidencing” the fact of the deposit of the title deeds and the advance made. The effect of the provisions of the Registration Act to which I have referred entails the somewhat curious and, indeed, surprising result that in some instances a mortgagee may ultimately find himself in a far worse position, because he has procured from the mortgagor a document in writing, than if he had done no such thing and had rested content merely with taking into his possession the documents of titles to the property which was being mortgaged. The reason why the mortgagee may find himself in a worse position with a document than without a document is because of the principles of law as enunciated by Sir Richard Couch, C.J in the well-known case of Kedarnath Dutt v. Shamloll Khettry, where the learned Chief Justice said:—
The rule with regard to writings is that oral proof cannot be substituted for the written evidence of any contract which the parties have put into writing. And the reason is that the writing is tacitly considered by the parties themselves as the only repository and the appropriate evidence of their agreement.
Then dealing with the facts of the case before him, he continued thus:—
If this memorandum was of such a nature that it could be treated as the contract for the mortgage, and what the parties considered to be the only repository and appropriate evidence of their agreement, it would be the instrument by which the equitable mortgage was created, and would come within s. 17 of the Registration Act.
The learned Chief Justice then decided on the facts that the memorandum in question was not a writing of that character. That passage in the judgment of Sir Richard Couch has been quoted with approval over and over again in the course of a long track of authorities and we must therefore take that statement of the law as being the starting point of any discussion upon the question of whether or not a particular writing relating to or made in connection with an equitable mortgage is of such a character that it ought to have been registered. If a document is of such a character but is not registered it cannot be used in evidence at all and the transaction itself cannot be proved by oral evidence either. Thus it comes about that if there is a writing which ought to have been registered and yet not registered the mortgagee finds himself in the unfortunate position of not being able to enforce his supposed security. A half-hearted attempt was made in the course of the, argument in this appeal to contend that it might be possible to discard, or, at any rate, to ignore a writing which should have been registered but which has not been registered. But that is not the law. Where there is a writing which ought to have been registered that alone must be taken as being the contract between the parties and so it is unenforceable in default of registration. The real question that has to be decided in this appeal and the one the learned Judge had before him at the trial is whether in the particular circumstances of this case, there was in existence in connection with the loan made by the plaintiffs a writing of a registrable character, if I may so describe it.
Accordingly, we have to ask ourselves first of all, what are the circumstances (if in fact there is a document) in which registration is obligatory? The answer to that question is to be found in different forms in a number of cases and it is not necessary that I should refer to them all. Several were cited before us but it is sufficient, I think, to refer only to one or two of them. I quote, first of all, from the case of Subramonian v. Lutchman where Lord Carson delivering the judgment of the Judicial Committee of the Privy Council said this:—
This Board in Pranjivandas Jagjivandas Mehta v. Chan Ma Phee laid down the law as follows; “The law upon this subject is beyond any doubt: (i) Where titles of property are handed over with nothing said except that they are to be security, the law supposes that the scope of the security is the scope of the title, (ii) Where, however, titles are handed over accompanied by a bargain, that bargain must rule. (iii) Lastly, when the bargain is a written bargain, it, and it alone, must determine what is the scope and extent of the security. In the words of Lord Cairns in the leading case of Shaw v. Foster, ‘although it is a well-established rule of equity that a deposit of a document of title without more, without writing, or without word of mouth, will create in equity a charge upon the property referred to, I apprehend that general rule will not apply where you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document, and any implication that might be raised, supposing there was no document, is put out of the case and reduced to silence by the document by which alone you must be governed.’”
His Lordship continued:—
Applying the principles thus laid down to the present case, what this Board has to determine is did the document of July 15, 1908, constitute the bargain between the parties, or was it merely the record of an already completed transaction?
What we have to determine in this appeal is a similar problem as regards the document of August 2, 1924.
The next case I would refer to is that of Obla Sundarachariar v. Narayana Ayyar in which Lord Tomlin delivering the judgment of the Board quoted the views of Lord Carson in Kedarnath Putt's case and then (at p. 74) said:—
Ultimately, Lord Carson summed up the conclusion of the Board in these words:—
“Their Lordships have, no doubt, therefore, that the memorandum in question was the bargain between the parties, and that without its production in evidence the plaintiff could establish no claim and as it was unregistered it ought to be rejected.”
While their Lordships do not think that the language of Lord Carson conveys or was intended to convey the meaning that no memorandum relating to a deposit of title deeds can be within s. 17 of the Indian Registration Act, unless it embodies all the particulars of the transaction of which the deposit forms part, their Lordships are of opinion that no such memorandum can be within the section unless on its face it embodies such terms and is signed and delivered at such time and place and in such circumstances as to lead legitimately to the conclusion that, so far as the deposit is concerned, it constitutes the agreement between the parties.
Having regard to the view already expressed of the effect of the memorandum now under consideration, no comfort is to be found for the appellants in the case upon which they relied.
Then follows a passage which is of much importance for our present purpose:—
Their Lordships reach the conclusion that the memorandum was not other than a written record of the particulars of deeds the subject of an agreement constituted in fact by the act of deposit and the payment of the money, and that it neither purported nor operated to create or declare any right, title or interest in the property included in the deeds, with the result that it did not require registration.
The words of Lord Tomlin contained in that passage provide the clue or perhaps more accurately the criterion which should enable a Court to come to a proper conclusion as to whether or not any particular document made in connection with an equitable mortgage is of such a character that it requires to be registered.
The material antithesis seems to be this: Was the document no more than a written record of the particulars of the deeds which were the subject of an agreement constituted by an act of deposit or was it, on the other hand, a memorandum which in itself purported or operated to create or declare some right, title and/or interest in the property included in the deeds. Another way of stating the same thing is, of course, to be found in the passage from the judgment of Sir Richard Couch, which I quoted at the outset. The question at issue in the present case may be thus stated: “Did the parties consider and intend the document of August 2, 1924, to be the only repository and appropriate evidence of their agreement?” I have already suggested that the plaintiffs were obviously well alive to the possible difficulties which might arise. Equally well, the defendants on their part were fully cognizant of a point which might well afford an effective answer to the plaintiffs' case, for we find that in para. 2 of their written statement appearing at p. 15 of the paper-book they pleaded thus: “With reference to para. 3 of the plaint the defendants state that the memorandum referred to therein constituting as it does the bargain between the parties is inadmissible in evidence for want of registration”. The question for our determination, therefore, is what was the true nature of the writing made on August 2, 1924, and signed by the mortgagors? Mr. Das on behalf of the defendants appellants contended that the memorandum of August 2, 1924, really contained all the terms of the bargain between the parties except, if I may so put it, the actual handing over of the title deeds of the property which was mortgaged. I have stated that the essence of an equitable mortgage is the handing over of the title deeds of immoveable property. It is, therefore, difficult to see how it ever comes about that any writing relating to or made in connection with an equitable mortgage should, in any circumstances whatever, require registration, because the mortgage is actually effected by the physical act of handing over of title deeds with an intent to create a security thereon. But it seems idle to speculate about something which is perhaps in the region of the metaphysical because the authorities show beyond all dubiety that there are circumstances where consideration of a writing—made more or less contemporaneously with the actual deposit—is not only permissible but highly important as providing a paramount and determining element in the Case. Therefore, although the actual delivery of the title deeds is not a matter which can be an integral part of a document except perhaps notionally in those instances where the title deeds are already in the hands of the lender or his agent and it is then stipulated in writing that thenceforward the character of the possession or the custody of the deeds shall be changed and they shall thereafter be held by the lender as security for money which he has advanced to the borrower, in other words, in cases where a man who was up to a point a mere depositee thenceforth becomes a mortgagee as regards the documents which are in his possession, it seems that where one finds that there is a document which contains all the terms of the bargain between the parties except perhaps a declaration with regard to the delivery of, or change in, the possession, it may well be said that the document becomes the only repository and appropriate evidence of the bargain between the parties, though where documents of title are already in the possession of the proposed lender there must, of course, be a constructive delivery on the part of the borrower. If they are not already in the possession of the proposed lender there must be an actual delivery of possession on the part of the borrower.
Mr. Das has argued that as regards the second instalment of the loan, that is to say, as regards the lending of the Rs. 13,000 there was no actual deposit of the title deeds. The title deeds had passed into the possession of the mortgagees on July 24, 1924, at or about the time when the first instalment of the projected total loan of Rs. 25,000, namely, the sum of Rs. 12,000 was advanced to the three Shahas. Mr. Das has, accordingly, argued that the memorandum of August 2, 1924, was an integral and essential part of the transaction, in that, without that document, there would be no security at all for the second instalment of the loan.
The further point taken by Mr. Das—it is perhaps in a sense a minor one and I will dispose of it at once—was that the document of August 2, 1924, was clearly a document of the kind contemplated by s. 17 of the Registration Act, because it created an interest to or in land, i.e, immoveable property, in that it conferred on the mortgagees a right of sale which they would not otherwise have had right of sale is not ordinarily available to a mortgagee under an equitable mortgage. In connection with that part of his argument Mr. Das referred us to the case of Kala Chand Mundul v. Gopal Chunder Bhattacharjee where it was held that “a document which gives or purports to give a right to have immoveable property brought to sale with a view to a recovery, out of its proceeds, of money lent (principal and interest) is an instrument which creates an interest in immoveable property, and as such cannot, under s. 49 of the Indian Registration Act, be received in evidence without being registered”.
Mr. Das's argument on this point was no doubt put forward with the idea of putting the document, Ex. B, into that one of the two categories indicated by Lord Tomlin which consists of documents of a kind requiring registration. There may be some value in that point of Mr. Das, but we do not propose to decide this appeal on that basis. It is, in my opinion, desirable that the matter should be determined on far broader principles. The learned Judge at the trial reviewed many authorities and he seems to have taken into consideration all the relevant propositions of law and then, on the facts and circumstances of the case, put the document of August 2, 1924, into the other category indicated by Lord Tomlin, namely, the one which would not entail necessity for registration. The learned Judge summarised his conclusions in this way:—
I am satisfied that the memorandum was nothing but a record of what had already been agreed to orally on July 24th subject to such minor alterations as were agreed to orally between the parties on August 2nd. That being so, it follows that the memorandum is not a document which contains the bargain made between the parties and does not require registration.
The whole question before us is whether we can agree with the view expressed by the learned Judge in those two short paragraphs. The learned Standing Counsel appearing on behalf of the plaintiffs—respondents to this appeal—conceded in answer to a question put by myself that all the terms of the bargain between the parties are indeed contained in the memorandum of August 2, 1924, with this qualification that the only thing which stands outside the document is the actual physical transfer of the title deeds. I have already suggested that it is not at all easy to understand how in a case where there is an actual physical transfer of title deeds it can even be said that a writing contains the whole bargain between the parties. It would seem rather that the transfer of the title deeds can only come into a writing—if I may so put it—where the transfer is constructive and not concrete. If that is the right view of the matter it would follow that what was conceded by Mr. S.M Bose entails the consequence that the document of August 2, 1924, was really the repository and the only appropriate evidence of the terms of the bargain between the parties. It is, however, desirable in a case of this kind and indeed only proper that we should examine the facts of this case for ourselves and in particular the precise terms of the document with which we are concerned and not merely act upon a statement from the bar in the nature of an admission. I say “the document”—using the word in the singular—because the learned Judge seems to have decided the case on the footing that there was only one document or at any rate that only one was really material. Actually of course there were two documents: the one made on July 24, 1924 (which was Ex. A in the case) and the one made on August 2, 1924 (which was Ex. B). Exhibit A appears at p. 55 of the paper-book and it purports to set out the terms and conditions of the advance of a total sum of Rs. 25,000 to the three Shahas who are described as “by caste, Bârendra Shaha, merchants and zemindârs”. The terms are as follows:—
(1) The said sum of Rs. 25,000 (twenty-five thousand] shall be paid as follows, namely, Rs. 12,000 (twelve thousand) on the 24th instant and the balance on or before the 31st instant.
It is agreed, however, that the balance was actually paid on August 2nd.
(2) Interest at the rate of 9 per cent, per annum payable half-yearly with rests in the account to be computed from the respective dates of advance.
(3) Period of the loan—one year computed from August 1st, next.
So the original period of the loan was from August 1, 1924, to August 1, 1925. That was subsequently altered by the provisions of the deed of August 2, 1924.
(4) Mortgagors will be at liberty to pay off the said principal sum of Rs. 25,000 (twenty-five thousand) after the expiration of six months from August 1st, next.
(5) The said advance of Rs. 12,000 (twelve thousand) will be made on the deposit of the documents of title relating to the premises No. 75, Benia-tola Street abovementioned and after the balance of Rs. 13,000 (thirteen thousand) shall be paid the mortgagors will execute in favour of the mortgagee a memorandum evidencing the said deposit and embodying the terms and conditions of the loan.
This particular provision is in my view of great importance, for it seems to me to indicate that it was from the very beginning within the contemplation and indeed was the intention of the parties that there should be a memorandum in writing, not only evidencing the said deposit but embodying all the terms and conditions of the loan. Then comes para. (6) which runs thus:—
The mortgagors will pay all costs, charges and expenses of and incidental to the transaction whether the same shall be completed or not unless such, non-completion shall be due to the wilful default of the mortgagee.
Then follows the rest of the para. (6) and in para. (7) there appears certain provisions with regard to costs with which we need not concern ourselves. At the end of this document there is on the part of the borrowers—the mortgagors—a receipt for a sum of Rs. 12,000 on the security and upon the terms and conditions hereinbefore mentioned. It would seem clear, therefore, that the sum of Rs. 12,000 was received by the borrowers upon the footing that later on, when the balance of Rs. 13,000 was paid, they would make a memorandum evidencing the deposit and embodying the terms and conditions of the loan. That seems to have been the position on July 24th. No doubt, steps were taken or rather attemps were made on the part of the lender to avoid the possible obstacles that could arise from the existence of s. 17 of the Registration Act by having the money handed over on a receipt from Jnanendra Nath Shaha (who was acting for himself and his brothers) at a moment which was antecedent to the signing of the document, Ex. A. But, although no doubt the time and the place are relevant and are matters to be taken into consideration, the precise sequence of events, in my opinion is not by any means conclusive.
In connection with the point which I am now considering, that is to say, the intention of the parties as evinced by the provisions of para. (5) of Ex. A, I will just refer to one or two passages in the evidence given at the trial. First of all, p. 30. The question was:—
May I take it that the idea all along was that a document would be executed when payment was made?
The answer was:—
Some document would be executed.
This is question No. 120. It is quite true that the same witness in answer to the question:—
On August 2nd was there any intention of having a memorandum executed?
No. something was to be written simply recording the terms and conditions.
But at p. 33—question 150—we find this:—
You told my friend that you were claiming Rs. 44,000 and odd in this suit?
Answer
Question 151:—
That is on the footing of the terms and conditions mentioned in the memorandum?
Answer:—
I think we must take it, therefore, that the real position was that the mortgagees were desirous of having put into written form all the terms of the bargain between themselves and the mortgagors. What they endeavoured to do was to get all the terms into writing and yet at the same time to avoid the necessity of having the writing registered. Did they succeed in that object?
Let us now turn to the document of August 2nd, which as I have said, was the only document the learned Judge took into consideration. The document Ex. B described itself in this way:—
Memorandum of Agreement made this second day of August one thousand nine hundred and twenty-four between Kedar Nath Shaha, Ateendra Nath Shaha and Jnanendraj Nath Shaha (sons of Loke Nath Shaha) of Tentulia in thânâ Sirajganj, district Pabna, and also of No. 75, Beniatola Street in the town of Calcutta, by caste Bârendra Shaha, merchants and zemindârs (hereinafter called “the mortgagors” which expression shall unless excluded by or repugnant to the context include their respective heirs, executors, administrators and assigns) of the one part and Hari Shankar Paul and Hari Mohan Paul, both of No. 92, Shobhabazar Street in the town of Calcutta (sons of Butto Kristo Paul deceased), by caste Gandhabanik, merchants and landholders (hereinafter called “the mortgagees” which expression shall unless excluded by or repugnant to the context include them respectively, their respective heirs, executors, administrators and assigns) of the other part.
Then there are certain recitals as follows:—
Whereas the mortgagors are solely and exclusively seized and possessed of or otherwise well and sufficiently entitled as and for an absolute and indefeasible estate of inheritance in fee simple in possession or an estate equivalent there to all that messuage land hereditament and premises fully described in the first schedule hereto free from all encumbrances. And whereas the mortgagors applied to the mortgagees to lend them the sum of Rs. 25,000 (twenty-five thousand) at interest at the rate of 9 (nine) per cent per annum and the mortgagees have agreed to make the said advance on the security of the documents of title specified in the second schedule hereto relating to the said hereditaments and premises described in the said first schedule hereto and on the faith of the mortgagors' representations to the mortgagees to the effect following, namely: (1) that they are the sole and absolute owners of the said hereditaments and premises described in the said first schedule hereto in fee simple in possession or an estate equivalent thereto free from all encumbrances (2) that the documents of title specified in the second schedule hereto are the only documents which have ever been in the possession of the mortgagors relating to the said hereditaments and premises described in the said first schedule hereto (3) and that they have not deposited any documents relating to the said hereditaments and premises and described in the said first schedule hereto with any person or persons as security or otherwise, dealt with the same in a manner so as to prejudice or affect their absolute title to the said hereditaments and premises.
So that the loan which was being made was one for a sum of Rs. 25,000.
Then comes this recital:—
Whereas the mortgagees on July 24th last paid to the mortgagors the sum of Rs. 12,000 (twelve thousand) out of the said sum of Rs. 25,000 (twenty-five thousand) and as security for the said sum of Rs. 12,000 (twelve thousand,) the mortgagors deposited with mortgagees' agents Messrs Kar, Mehta & Co. at their office at No. 11, Old Post Office Street in the town of Calcutta the documents of the title specified in the second schedule hereto relating to the hereditaments and premises described in the first schedule hereto and whereas the mortgagees have prior to the execution of these presents paid to the mortgagors the sum of Rs. 13,000 (thirteen thousand) being the balance of the said advance of Rs. 25,000 (twenty-five thousand) as they the mortgagors do hereby as well as by the receipt hereunder written admit and acknowledge Now these presents witness and it is hereby agreed and declared between and by the parties hereto as follows:—
1. In consideration of the sum of Rs. 12,000 (twelve thousand) to the mortgagors paid by the mortgagees on the said 24th day of July, 1924, and in consideration of the said sum of Rs. 13,000 (thirteen thousand) to the mortgagors paid by the mortgagees before the execution of these presents as hereinbefore mentioned making together the sum of Rs. 25,000 (twenty-five thousand) the deeds, evidences and writings specified in the said second schedule hereto relating to the hereditaments and premises described in the said first schedule hereto which said deeds, evidences and writings have as hereinbefore stated prior to the execution of this Agreement being delivered by the mortgagors to the mortgagees' said agents in the town of Calcutta with intent to create a security on the said hereditaments and premises described in the said first schedule hereto such as is contemplated in the concluding proviso to s. 59 of the Transfer of Property Act (such security having been created prior to the execution of this Agreement by the delivery of the documents hereinbefore mentioned) will be held by the mortgagees as such security as aforesaid for the payment by the mortgagors to the mortgagees at the time and in the manner hereinafter mentioned and the costs (as between attorney and client) charges and expenses of and incidental to any proceeding which may be had for the protection of this security or for procuring or obtaining or attempting to obtain payment of the moneys hereby secured.
I emphasise that last sentence “for procuring or obtaining or attempting to obtain payment of the moneys hereby secured”.
Then follows certain provisions in paras. 2, 3, 4 and 5 which I need not specify. Then comes para. 6:—
The mortgagors hereby do declare that the said advance of Rs. 25,000 (twenty-five thousand) has been made by the mortgagees to the mortgagors on the faith of the following representations of the mortgagors made to the mortgagees' said agents, namely, (a) that they are absolutely seized and possessed of or otherwise well and sufficiently entitled as and for an absolute and indefeasible estate of inheritance in fee simple in possession or an estate equivalent thereto to the hereditaments and premises described in the said first schedule hereto though the conveyance, dated July 29, 1907, is in favour of the mortgagor Kedar Nath Shaha only and that the same was purchased out of funds belonging to all the mortgagors and (b) that they have good right, full power and absolute authority to make a mortgage of the said hereditaments and premises which they have purported to do by the delivery of the said deeds evidences and writings relating thereto to the mortgagees' said agents at the place in the manner and with the intent and for the purpose hereinbefore mentioned.
In paras. 8 and 9 an expression is used which appears to indicate that whoever it was who drafted the document suddenly by a flash of memory, as it were, remembered that the document must be put into such a shape and couched in such language as to evade any necessity for the registration of it and we so find in para. 8 this provision:—
In case the said hereditaments and premises or any part thereof shall be acquired under the provisions of the Land Acquisition Act (I of 1894) or any other Act for the time being in force for the acquisition of land for public purposes during the subsistence of the said security hereby evidenced it shall be lawful for the mortgagees…………
and so on.
The material part of that sentence is the expression “hereby evidenced”. Then in para. 9 we find this:—
That simultaneously with the institution of a suit for sale by the mortgagees upon the security hereby evidenced or at any subsequent stage of the suit a receiver shall upon the application of the mortgagees and without further consent on the part of the mortgagors than is herein contained and notwithstanding their dissent and opposition thereto be appointed of the rents, issues and profits of the said hereditaments and premises………….
It seems to me that the use of that expression “hereby evidenced” was the result of a desire to keep the document within the category of instruments not requiring registration.
Paragraph 10 we need not consider.
Then comes para. 11 which again is of great importance for the determination of the nature of this document. The paragraph runs thus:—
It shall be lawful for the mortgagees at any time or times without any further consent on the part of the mortgagors to sell the said hereditaments and premises or any part or parts thereof either together or in lots….
This is of course the provision which—according to Mr. Das's argument—brought it about that the document created an interest in or to immoveable property and, therefore, necessitated registration. The paragraph later on runs thus:—
By public auction or by private contract and either with or without special conditions or stipulations relative to title or otherwise with power to buy in at sale by auction and to rescind contracts for sale and to resell without being answerable for any loss or diminution in price and with power also to execute assurance give effectual receipts for the purchase money and do all other acts matters and things for completing the sale which the mortgagees shall think proper and the mortgagees shall with and out of the moneys to arise from any such sale as aforesaid in the first place pay and retain the costs charges and expenses attending any such sale or otherwise incurred in relation to this security…….
I underlined the expression “to this security”—
and in the next place pay and satisfy all moneys which shall then be owing upon the security of these presents for principal interests costs and shall pay the surplus (if any) to the mortgagors………..
That last sentence, I think, should be doubly underlined.
At the end of para. 11 we find this:—
It is hereby further declared that the power of sale hereinbefore contained may be exercised by any person or persons for the time being entitled to receive and give a discharge for the moneys for the time being owing on the security of these presents.
The concluding sentence should also be underlined.
Looking at this document as a whole, I come to the conclusion that it was clearly the desire and the intention of the mortgagees that the mortgagors should give to them a document which would contain all the terms of the bargain between the parties. There is that; sentence in para. 1—“such security having been created”—and in each of paras. 8 and 9 the expression,—“hereby evidenced”. But it seems to me that those three sentences or expressions were designedly put into the document by the mortgagees or their legal advisers for the express purpose of avoiding the necessity for registration. Therefore, in a sense, the document was intended to be “a fraud on the Registration Act” as was said by the Privy Council in an analogous case. The mortgagees desired to have all the advantage afforded by a written instrument whilst avoiding for some reason, which is not very clear, the obligation to register that instrument. In my view, the mortgagees failed to achieve their object. They were obtaining from the mortgagors a document in a form which—as the learned counsel appearing for the mortgagees-appellants has in effect admitted—contains all the terms of the bargain. They have put themselves into the position of having entered into a contract between themselves and the defendants in writing and the writing was of such a character as calls for registration and so falls within the purview of s. 17 and s. 49 of the Registration Act: Consequently in default of registration of the document the plaintiffs-mortgagees were not in a position to establish their claim.
It is with much regret that I find myself unable to agree with the view taken by the learned Judge of first instance but for the reasons I have endeavoured to express. I am of opinion that this appeal must be allowed with costs both of the appeal and of the trial.
Panckridge, J.:— I am of the same opinion and I have nothing to add.
Appeal allowed: suit dismissed.
Attorneys for appellant: H.N Dutt & Co.
Attorneys for respondent: Kar Mehta & Co.
G.S